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Page 26 — Retail Properties Quarterly — May 2015
T he American shopping mall
is dead! Or so some would
have you believe. Since 2010,
more than two dozen shop-
ping malls across the country
have closed. A proliferation of news
articles and opinion pieces emphat-
ically state that the enclosed mall
concept is a thing
of the past.
But before we
place the final
R.I.P. placard on
the mall, it might
be worthwhile to
consider some
other factors.
Malls do not die
because the idea
of an enclosed
shopping venue is
unattractive and
obsolete. They die
because demo-
graphics shift,
shopping habits
change, mall own-
ers face financial
challenges, malls
become overly
saturated with the
same stores and
merchandise, or a
better retail venue
is built nearby. The
consolidation of
department stores
is one example –
think about Macy’s
buying Rich’s, and
maybe Belk soon as well.
If a mall does shut its doors, it
is because it failed to adapt. As far
back as 10 B.C., people gathered
together to conduct commerce.
There is something magical about
being among hundreds or thou-
sands of other people shopping.
To illustrate that malls are not
on the downward spiral, consider
the following: 1) mall rents are on
the increase; 2) mall sales are on
the increase; and 3) net operating
income in malls is increasing – in
2014 shopping mall NOI recorded
the highest year-over-year growth
in 14 years. These three facts alone
should dispel any rumors about the
demise of the American mall.
No discussion about any subject
is complete without inserting the
effect millennials will have on the
mall. Conventional thought today
would purport that this demo-
graphic will be the final nail in the
proverbial coffin. But that would be
a misguided conclusion. In a recent
study, Opinion Lab concluded that
among millennials: 1) 85 percent
planned to go to a mall this sum-
mer; 2) 60 percent say they go at
least once a month; 3) nearly half
rank browsing in stores as their No.
1 reason for going to the mall; and
4) only 10 percent say there is noth-
ing to motivate them to spend time
in a mall.
The retail specialty practice group
at Cooper Carry has been involved
in the design of over 5 million
square feet of recent retail projects,
encompassing new construction
and renovation of malls and large
open-air projects.
Landmark Mall near Washington,
D.C., is one such example. Built in
1965, the mall lost its luster and the
owner suffered a financial crisis.
New owners are repositioning the
mall to become an urban mixed-use
project. The plan includes taking off
the roof, demolishing some retail
space and adding apartments.
The conclusion is simple – if 3.2
percent of American malls have
failed, then 96.8 percent have not.
Malls will refine or reposition them-
selves as they respond to changing
demographics, shopping habits or
oversaturation of similar retail-
ers. The bottom line is most of
the malls in trouble will get new
owners with the capital it takes to
achieve the refinement or reposi-
tioning required to remain a viable
investment asset. Those that do not
will be part of the 3.2 percent.
Ultimately, the key to keeping
the American mall alive and well
is adapting to current trends. This
means creating more walkable
and appealing space that caters to
demographic shifts and changes in
shopping habits.s
Angelo Carusi
Principal, retail
specialty practice
group, Cooper
Carry, Atlanta
Gar Muse
Principal, retail
specialty practice
group, Cooper
Carry, Atlanta
Market Driver
The Landmark Mall near Washington, D.C., is being redeveloped as an open-air, mixed-use center.
Traditional malls that are failing must be repositioned through creative redevelopment.